AnalysisStrategic Audit Heading (+) FactorsI. Current Situation A. Past Corporate Performance In comparison to 2007, GAP has increased its ROI, profitability & market share by 3.4%Indexes B. Strategic Posture •One of the leaders when it comes to International specialty clothing retailers •Each of the lines help each customer to express their individual styles. Current Mission •Company’s employees and directors are responsible for acting based on the Code of Business Current Objectives Current Strategies Conduct, meaning that they must all treat each other with fairness, dignity and respect. Current Policies •Code of Business Conduct: the company will always act ethically towards its employees and customers. •As for the mission statement, the objectives, their strategies and policies, the corporation states them clearly and in full detail.SWOT Analysis Begins:II. Corporate Governance A. Board of Directors “The board is responsible for oversight of the business, affairs and integrity of the company, determination of the companys mission, long-term strategy and objectives, and oversight of the companys risks while evaluating and directing implementation of company controls and procedures.” Under Glenns leadership, the company has successfully driven bottom line earnings growth by focusing on healthy margins and expense management. B. Top Management A diverse and talented executive management team focused on executing Gap Inc.s strategy to engage customers and maximize shareholder returns
AnalysisStrategic AuditHeading (+) Factors (-) Factors CommentsIII. External Environment (EFAS): Opportunities &Threats(SWOT)A. Societal •Markets in Southeast Asia •Increased competition The advantage of this is that they will be providedEnvironment •Launch of Piperlime •Remarkably easy to with local experience, knowledge and views, imitate something that will help them adapt to new markets more rapidly. B. Task Environment •Growth in online retail spending •Shoppers switched to Threat of new entrants: HighIndustry Analysis •Line extensions (accessories, baby rival clothing retailers Bargaining power of buyers: Medium wear) Threat of substitute products or services: High Bargaining power of suppliers: Low Rivalry among competing firms: HighIV. Internal Environment (IFAS): Strengths and Weaknesses(SWOT) A. Corporate Organized Only one GlobalStructure Human Resources & Corporate Affairs Executive B. Corporate Culture Board of Directors not only meet legal requirements around the world, but also operate responsibly and with integrity in everything they do
Strategic Audit Heading Analysis (+) Factors 1. Marketing SAN FRANCISCO – Oct. 3, 2007 – Gap is proud to introduce its latest marketing campaign for (PRODUCT) RED, a for-benefit brand designed to help eliminate AIDS in Africa. Captured by acclaimed photographer Annie Leibovitz and featuring a diverse cast of socially-conscious celebrities, the new campaign underscores the idea that it is possible for an individual to change the world. 2. Finance Gap Inc. announces sales results through a press release on a monthly basis and announces quarterly earnings results through a press release, a live conference call, and webcast. Specific financial release dates are also available and can be found in reporting calendar. Gap Inc. shares its financial information to help its investors analyze the company and make informed decisions. (Gapinc.com) 3. Research and Development Focused on cost cutting, consumer research, and more targeted marketing of the three bands. Also, company-commissioned research is directing brand presidents on how they could expand the chains into “lifestyle brands”. 4. Operations and Logistics The company’s logistics network and sourcing operations for both apparel and non apparel, spanning more than 50 countries. 5. Human Resources The Executive Vice President of Gap Inc. is also in charge of human resource operations worldwide. Gap Inc. began its Human Resources organization in the year 2000. 6. Information Systems Managers were ordered to rely increasingly o software that would tell them when and by how much to mark down merchandise. (case)
External Factor Analysis Summary (EFAS)External Factors Weight Rating Weighted Score CommentsOpportunitiesGrowth in online retailspending .10 4 .40 Predicted to increase online salesLine extensions Gap, GapKids, BabyGap &(accessories, baby wear) .15 5 .75 GapBody. Franchise agreements to generateMarkets in Southeast Asia .20 3 .60 growth. Online retail company (footwear &Launch of Piperlime .10 3 .30 handbags)ThreatsShoppers switched to rivalclothing retailers .20 3 .60 Shoppers chose fresher competitors Competing with discount retailersIncreased competition .10 2 .20 (Target & Wal-Mart)Remarkably easy to imitate .15 2 .30 Gaps khakis-and-blue shirt formulaTotal Scores 1 3,15
Internal Factor Analysis Summary (IFAS) WeightedInternal Factors Weight Rating Score CommentsStrengths Founded in 1969, more than 3,000Brand recognition .10 4 .40 storesAppeal to broad target Men, women, children, babies,market .15 5 .75 accessories, e.t.c.Large network of physical US, Canada, France, Japan, UK,stores .15 5 .75 e.t.c. TV ads, in store promotions, printMarketing campaigns .10 3 .30 ads, direct mail, outdoor adsCut 9-month productioncycle to 3 months & Adapt to emerging trends morecustomize deliveries .10 3 .30 rapidlyWeaknessesStruggle to recapturecustomers who hadabandoned it. .10 1 .10 Perception problem Revenues decrease from 2005 toDecline in revenues .15 2 .30 2006Overdependence on North Gap relies too much on the USAmerica .05 3 .15 (83,6% of revenues)Shut down of Forth & Towne .10 1 .10 Open in 2005, closed in 2007Total Scores 1 3,15
Analysis of Strategic Factors (SFAS)Strategy Factors Weight Rating Weighted Short Intermediate Long Comments scoreS01 Brand recognition .05 3 .15 X More than 3,000 stores worldwideS2 Appeal to broad target .15 4 .60 X Men, women, childrenmarketS3 Large network of .15 4 .60 X X US, Canada, France, Japan, UKphysical storesW3 Overdependence in .05 2 .10 X 83,6% of revenuesNorth AmericaW2 Decline in revenues .15 2 .30 X X Decrease from 2005 to 2006O2 Line extensions .15 5 .75 X X Predicted to increase online salesO1 Growth in online .10 3 .30 X babyGap, GapBodyretail spendingO3 Markets in Southeast .10 2 .20 X Generate growth.AsiaT1 Shoppers switched to .05 3 .15 X X Chose fresher competitorsrival clothing retailersT2 Increased competition .05 2 .10 X Tiger, Wal-Mart, AbercrombieTotal Score 1.00 3,15
Gap Inc.Industry InformationFirst Gap store in San Francisco in 1969.Gap Inc. has a number of brands containing Gap (including Gap, GapKids, BabyGap, andGapBody), Banana Republic, Old Navy, Piperlime, and Athleta.Outlet stores such as Gap Outlet, Gap Generation, and Banana Republic Factory Stores. Over 3,200 stores worldwide with 3,100 company-operated stores located across the UnitedStates, United Kingdom, Canada, China, France, Ireland, Japan, &Italy.200 franchise stores in locations across Asia, Australia, Europe, Latin America, the MiddleEast, and Africa.They are well known around the world with over 134,000 employees. Gap Inc. in 2011:Gap Inc. has a number of brands containing Gap (including Gap, GapKids, BabyGap, andGapBody), Banana Republic, Old Navy, Piperlime, and Athleta. There are over 3,200 storesworldwide with about 3,100 company-operated stores located across the United States, UnitedKingdom, Canada, China, France, Ireland, Japan, and Italy and about 200 franchise stores inlocations across Asia, Australia, Europe, Latin America, the Middle East, and Africa. Gap Inc.also offers outlet stores such as Gap Outlet, Gap Generation, and Banana Republic FactoryStores. They are well known around the world with over 134,000 employees.
Governance & Compliance Corporate GovernanceGap Inc. was founded in 1969 on the principle of conducting our business in aresponsible, honest and ethical manner. For us, good corporate governance meansgoing beyond compliance. It means taking a leadership role in instituting andmaintaining practices that represent strong business ethics — and ensuring wecommunicate consistently with our shareholders, customers and neighbors around theworld.We are committed to continually evolving and adopting appropriate corporategovernance best practices. Gap Inc.s Corporate Governance Guidelines were mostrecently updated in 2011. Corporate ComplianceGap Inc. was founded on the principle of doing business responsibly, honestly andethically. We take corporate compliance very seriously. Our comprehensive corporatecompliance program is designed to ensure that all employees and the companys Boardof Directors (directors) not only meet legal requirements around the world, but alsooperate responsibly and with integrity in everything they do.A combination of written guidelines, formal processes and management oversighthelps us ensure that "strong corporate compliance" arent just words on paper, but away of doing business at Gap Inc.